According to Orbit Markets analysts, the upcoming Ethereum Shanghai upgrade could result in sustained Ether price volatility.
report It suggests that an upcoming Ethereum Shanghai upgrade could trigger Ether (ETH) price volatility in ways that the merge failed to do. The Shanghai upgrade will facilitate the withdrawal of his more than 16.5 million ETH staked on the blockchain, according to institutional liquidity provider OrBit Markets. Additionally, OrBit Markets also recommended that he buy ETH volatility swaps among the Shanghai upgrades. This will help them profit from the expected price volatility after the mainnet upgrade in March.
Analysts say the Shanghai upgrade could soon affect the supply and demand balance of the ether market. This predicted development could leave the crypto more volatile in the weeks after Shanghai than after the merger.
Orbit Markets co-founder Yang Zhiming compares September’s Merge and Ethereum Shanghai upgrades, which successfully moved the network from proof of work to proof of stake, saying: .
“Although this time may be different. The merge was a pure technological shift with no direct economic impact, while the Shanghai upgrade changed the supply and demand of ETH in both the short and long term, causing ETH It can have a big impact on prices.”
Analysts Suggest Ethereum Shanghai Volatility May Prove Allegations Wrong
Traders may not have seen great volatility on the Ethereum merge. As a result, Mr Zhiming explained, these traders are allowed to cancel out the volatility of Shanghai’s upgrade prices as well. However, Orbit Markets co-founder and former Deutsche Bank Asia Pacific Derivatives Head explains:
“Approximately $25 billion worth of ETH will be available for withdrawal and sale. As stake yields are expected to drop after the upgrade, previously staked investors will be encouraged to unstake and offer better yields.” It could be moved to other assets that do well, which will put a lot of selling pressure on the ETH price.”
The upcoming Shanghai upgrade comes months after a groundbreaking merge that made the Ethereum network greener. In addition, the merge made access to the blockchain easier, predicting Ether to become a deflationary currency. However, a significant network overhaul failed to immediately impact the supply and demand dynamics of cryptocurrencies as many thought.
The price of ETH dropped 10% to $1,472 on the day the merge took place, but the volatility quickly dissipated as the price traded in a tight range. Moreover, this narrow range of his $1,300 to $1,400 lasted four weeks after the merger. In his four weeks following the famous mainnet upgrade, his 30-day realized volatility of Ether plummeted from an annualized 85% to almost 60%. Realized volatility is a metric that evaluates the volatility of price movements seen over a given period of time.
Shandong testnet
Last October, Ethereum officially laid the groundwork for its upcoming Shanghai upgrade via the Shandong testnet. Parithosh Jayanthi, his DevOps engineer at the Ethereum Foundation at the time, explained that the testnet was a dress rehearsal for him. According to Jayanthi, Shandong allowed the developer to “test his potential EIPs to find problems.”
Ethereum is still the most widely used blockchain and its native ETH currency is the second largest crypto by market capitalization.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to explain the cryptocurrency story down to the basics so that anyone can understand it without much background knowledge. Krypto When he’s not heavily involved in storylines, Tolu enjoys music, loves to sing, and is also an avid movie buff.